2007 (8) TMI 32 - SC - Central Excise

Demand and penalty - department alleged that (i) Clandestine removal of goods, non-maintenance of statutory of records and accounts (ii) not entitle for benefit of Notification No. 175/86-C.E. - Held that department allegation was correct and allowed

Summary

Issues involved:
1. Clandestine removal and non-maintenance of statutory records and accounts leading to penalties.
2. Denial of SSI exemption for aluminium ingots.
3. Classification of pat scrap as excisable to excise duty.

Analysis:
1. The judgment addresses the issue of clandestine removal and non-maintenance of statutory records and accounts. The appellant, a partnership firm engaged in manufacturing aluminium articles, was penalized for violating Central Excise Rules by not maintaining RG-1 register, classification list, and statutory records. The penalty was imposed for clandestine removal of goods without filing the classification list, leading to penalties on the firm, a deceased partner, and the raw material supplier. The Supreme Court upheld the Tribunal's decision, emphasizing the importance of compliance with statutory rules and confirming the penalties imposed.

2. The denial of SSI exemption for aluminium ingots was another key issue. The Department denied the exemption for the appellant based on the total value of clearances exceeding the limit of Rs.2 crores due to the clearance of aluminium circles in the preceding year. The appellant argued that certain clearances should not be taken into account for the exemption calculation based on the brand name and nil rate of duty provisions in the exemption Notification No.175/86-CE. The Tribunal did not address this contention, leading the Supreme Court to remit the matter back to the Tribunal for a decision on whether the appellant was entitled to the exemption under the notification, emphasizing the need for a thorough examination of clearances' volume and value.

3. The issue of whether pat scrap should be classified as excisable to excise duty was raised by the appellant. The Tribunal did not address this contention either. The Supreme Court refrained from expressing an opinion on this matter and instructed the Tribunal to decide on the excisability of pat scrap under the Central Excise Act, 1944. This direction was given in light of the appellant's involvement in clandestine removal, emphasizing the importance of addressing all relevant issues in the case.

In conclusion, while upholding the penalties for clandestine removal and non-compliance with statutory rules, the Supreme Court remitted the issues of SSI exemption entitlement and pat scrap excisability back to the Tribunal for further examination. The appeals filed by the assessee were dismissed, with no order as to costs.